Covers January 2016 - bizsolindia.combizsolindia.com/wp-content/uploads/2016/01/Bizsol-update-January-2016.pdfBizsol UPDATE January - 2016 3 scheme, whereas Suraksha Bima Yojana is

Bizsol UPDATE January - 2016

1

MARCHING TOWARDS 2016 !!!!

The year 2015 has come to an end laying the path

for a brighter & better tomorrow of 2016. As an Indian

citizen, a question that often comes to the mind is

"What is it that is different in regime of Prime Minister

Narendra Modi?" To a layman Indian Citizen, the

biggest difference is the sense of involvement. He

has a unique style of involving every Indian in the

journey towards progress. Take for example his LPG

"Give it Up Campaign", where you find the Prime

Minister requesting to give up the LPG Subsidy so

that the affected community can take advantage. This

kind of campaigns make the difference where every

individual is driven to contribute to the society in a

manner that his / her conscious and pocket permits.

As we move towards the beginning of the New Year,

I wish to recap on some of the events of 2015 in India

that left an impression on my mind as would be

impacting the Indian economy in the coming days.

v Congress ensured a Thumbs down for GST

implementation. Winter session of the Parliament

is also washed away and the hope of moving to

GST from 1st April, 2016 is withered. Over

48,000 people, including prominent industrialists,

have supported a signature campaign launched

by industry body CII urging Members of

Parliament to allow the passage of the GST bill.

Titled 'Universal Appeal to Support GST' the

petition, filed on Change.org, terms the ongoing

delay in implementation of GST as a matter of

"great concern". People from countries like the

US, the UK, Canada, Australia, Singapore,

Malaysia, the UAE, South Africa and New

Zealand have also signed the petition. The

government is positive and keen on

implementing GST subject to the fulfillment of

requirements of passing the Law and therefore

one can very well expect the GST to be

FROM THE DESK OF CEO

implemented somewhere through the midst of

the next year as well.

v The Foreign Trade Policy Schemes introduced

by the Ministry of Commerce need to be

implemented in true spirit. With ongoing

litigations and "MERI MARZI" approach of the

Implementing Authorities, benefits extended by

the Schemes are virtually written off. The recent

controversial & Contradictory judgements of the

Bombay High Court vis-à-vis the Delhi High

Court in Served from India Scheme, DGFT

Internal Circulars w.r.t. Limit on Scrip amount

under Incremental Export Incentivisation

Scheme, Supreme Court Decision w.r.t.

Additional Consideration on account of

invalidation of Advance Authorisations, Denial of

Deemed export benefits for supplies to EOUs,

etc. are further examples of instable policies in

India. It is therefore crucial that the policies are

implemented in Letter and Spirit keeping in mind

that India has to be established as an attractive

investment destination.

v Black Money (Undisclosed Foreign Income and

Assets) and Imposition of Tax Act, 2015 was

enacted to deal with the threat of illegal wealth

hidden abroad and the Voluntary disclosure

scheme was brought in to target the undeclared

foreign assets. Similar schemes were launched

previously in 1965, 1975 and 1997. The

government managed to collect Rs. 3770 crore

from over 600 declarants. With so much wealth

stacked abroad, these kind of enactments and

their effectiveness would be established over a

period of time.

v Department of Industrial Policy and Promotion

(DIPP) released a report prepared by the World

Bank on "Assessment of State Implementation

of Business Reforms", which ranked the states


2

on ease of doing business and regulatory

reforms. The report revealed the status of

implementation of reforms of the 98-point action

plan in the following areas - Setting up a

business, Allotment of land and obtaining

construction permit, Complying with environment

procedures, Complying with labour regulations,

Obtaining infrastructure related utilities,

Registering and complying with tax procedures,

Carrying out inspections, Enforcing contracts.

The implementation status of each State was

converted to a percentage, and, on the basis of

this total percentage the State rankings were

given. The report was infact an eye opener and

it was disheartening to note that states like

Maharashtra, Karnataka were at 8th and 9th

position respectively with scoring being below

50%. These states are the developed states of

the country and it is very difficult to digest that

these states fared so badly. Gujarat topped the

charts but unfortunately the scoring is only 71%

which is definitely not upto the mark. The above

results are available in the public domain and

create a dampening impact on invest in India

which in turn could adversely affect the Made in

India. It is extremely crucial for the States to take

cognizance of this Report and work towards

overcoming the flaws to make it an attractive

destination for investment and growth.

v Infrastructure is the backbone for development

of the Indian economy. Railway Minister Suresh

Prabhu presented the Railway Budget in the

Parliament. Steps towards modernisation and far

reach have been taken since then. A detailed

report on the journey of Indian Railways towards

improvement has been published by Suresh

Prabhuji under the name of "Moving towards 360

degree transformation". The ambitions and

assurances are aggressive and we expect that

these will be committed. Focus is shifted on

development of Industrial Corridors and Smart

Cities. Pune has found itself a place to the 100

'Smart Cities' Project. Pune's inclusion in the

government's 'Smart Cities' initiative would be a

massive break-through for the entire city - both

in terms of its overall economy and its real estate

market.

v The Digital India programme was launched by

Prime Minister Narendra Modi in July, 2015.

Digital India is an initiative by the Government of

India to ensure that Government services are

made available to citizens electronically by

improving online infrastructure and by increasing

Internet connectivity. Facebook CEO Mark

Zuckerberg, who believes that connectivity is a

human right, said the cost of accessing the

internet needs to come down. The Facebook

founder is committed to help India on the

Digitisation programme to help connect the

villages. The initiative includes plans to connect

rural areas with high-speed internet networks.

There are ten pillars of Digital India Programme

- Broadband Highways, Universal Access to

Mobile Connectivity, Public Internet Access

Programme, e-Governance - Reforming

Government through Technology, eKranti -

Electronic delivery of services, Information for All,

Electronics Manufacturing, IT for Jobs, Early

Harvest Programmes, Upgradation of Indian IT.

Communication is the means towards progress.

Mobile technology is fast penetrating in the

Indian economy. Issues w.r.t. service quality on

this front is a grave concern and the

accountability needs to be entrusted to the

service providers. Telecom Regulatory Authority

of India (TRAI) mandated that the telecom

operator will have to pay ?1 for each dropped

call to the subscriber, from 1st January 2016

onward.

v Chennai floods has had a devastating impact.

One of the metro cities of the country failed

miserably in coping up with the shockwaves of

the nature. This furthers the need to rise and

gear up to the situation and an alarm for

adequate infrastructure in situations of natural

calamities as well as otherwise.

v The Social Security Measures have a significant

role in the sense of belongingness for every

citizen. Prime Minister Narendra Modi launched

3 large-scale social security schemes, Pradhan

Mantri Suraksha Bima Yojana, Pradhan Mantri

Jeevan Jyoti Bima Yojana, and Atal Pension

Yojana, at Nazrul Mancha in Kolkata. Jeevan

Jyoti Bima Yojana is a low premium life insurance


3

scheme, whereas Suraksha Bima Yojana is a low

cost accident cover insurance. Both of these

schemes provides an insurance cover of Rs. 2

lacs in a very low premium amount. Below is the

ad which was put in today's newspapers. The

pension scheme will address any old age income

security needs of the workers in the unorganized

sector. The government will guarantee a fixed

pension under this scheme and will also co-

contribute 50% of the premium. But the govt.

contribution is limited to Rs. 1,000 each year for

five years. This benefit is available only for the

new accounts opened before December 31,

2015. Depending on the contribution and period,

Atal Pension Yojana will provide a defined

pension to the subscribers. Pension Fund

Regulatory and Development Authority (PFRDA)

will administer this scheme.

v The report titled "Women and Men in India -

2015" (17th issue) by Ministry of Statistics and

Program Implementation, Government of India

highlights the status of women covering health,

education, work and decision making along with

social obstacles in women's empowerment. The

Ministry of Women and Child Development is

administering various schemes for gender

equality/socio-economic development/

empowerment of women w.r.t. Swadhar and

Short Stay Homes to provide relief and

rehabilitation to destitute women and women in

distress, Working Women Hostels for ensuring

safe accommodation for working women away

from their place of residence, Support to Training

and Employment Program for Women (STEP)

to ensure sustainable employment and income

generation for marginalised and asset-less rural

and urban poor women across the country,

Rashtriya Mahila Kosh (RMK) to provide micro-

finance services to bring about the socio-

economic upliftment of poor women, National

Mission for Empowerment of Women (NMEW)

to strengthen the overall processes that promote

all-round Development of Women, Rajiv Gandhi

National Creche Scheme for Children of Working

Mothers (including single mother) to provide day

care facilities for running a crèche of 25 children

in the age group 0-6 years from families having

monthly income of less than Rs 12,000, One

Stop Centre to provide integrated support and

assistance to women affected by violence,

Scheme for Universalisation of Women Helpline

intended to provide 24 hours immediate and

emergency response to women affected by

violence, Sabla Scheme for holistic development

of adolescent girls in the age group of 11-18

years, various capacity building measures for the

officials of the State Governments by organising

training programs/workshops regularly. A

separate Ministry of Skill Development and

Entrepreneurship has been created improve

employability. The success of these schemes will

depend upon the continued commitment and

focus of the Ministry of Women and Child

Development. While we are on women

development, it is inspiring to note that the

Ministry of Defence took steps and approved the

induction of women as combat pilots in the Indian

Air Force, leading the path towards further

empowerment of women.

v India with its huge young population has

tremendous potential for excelling in sports. It is

heartening to note that not only cricket but

Premier Leagues for various sports including

Badminton, Kabaddi, Hockey, Tennis etc have

been introduced which will give the budding

players an opportunity to work with the best

National & International Players. The month of

December saw the fulfillment of Leander Paes'

long cherished dream to bring quality tennis to

India, as international premier tennis league was

launched and graced by stars like Novak

Djokovic, Roger Federer, Ana Ivanovic and Sania

Mirza. Recently, another addition has been the

Indian Table Tennis League, all set to start next

June.

v India expanded the visa-on-arrival scheme to 43

nationalities from 12 countries earlier. It is in

process of rolling out a similar facility for 150

countries. The first International Yoga Day was

held on 21st June, recognising the ancient Indian

science's "holistic approach" to health and well-

being. The Yoga is a major tourist attraction in

India and the focus on promoting Yoga needs to

continue to establish India on the global map as


4

major Health Destination. Security and safety of

tourists continue to remain the major concerns,

and effective steps in this direction are essential

to bring in tourists across the globe so as to

exploit and capitalize the massive History and

Heritage of India.

v Narendra Modiji, is the perfect PRO for the nation.

Having travelled to various nations during his first

year of tenure, he recently took bold steps to

land in Lahore and extend the cordial relations

to our neighbouring country Pakistan. Ever since

1947 when partition took place, the relations

between these 2 countries have been under

constant turmoil due to various historical and

political events. The relations have been largely

affected by the Kashmir conflict. Repeated acts

of cross-border terrorism are also adversely

impacting the relation. However several meetings

have recently been attended by the foreign

secretaries and the national security advisers of

both nations wherein the hurdles affecting the

relationship have been discussed at length.

Prime Minister Modiji made a brief, unscheduled

visit to Pakistan while on his return travel to India,

becoming the first Indian Prime Minister to visit

Pakistan since 2004 and generating a new ray

of hope for better relations. Prime Minister Modiji

has also accepted the invitation to visit Pakistan

for the SAARC (South Asian Association for

Regional Cooperation) Summit in 2016. These

steps by Modiji would go a long way in building

and improving the strained relations of the two

nations. Unfortunately the terror attacks on

Pathankot, Punjab have been linked to this visit

and aimed at derailing the peace talks between

India and Pakistan.

v Delhi adopted the Odd-Even Model for Traffic &

Pollution Control. The Notification giving

exceptions to the Rule has also been published.

But to my understanding, this rule would be an

extremely tough challenge to implement. Take

the case of travel while pass through Delhi,

someone starting journey from Delhi for travel

outside, emergency cases (though mentioned as

trust based) - how would someone chose odd-

even while in such situations? This rule would

lead to deep pocket corruption in traffic police.

Moreover it would cause extreme inconvenience

to the General Public. While on this, it brings to

the forefront,traffic situation in my hometown

Pune. The situation is getting chaotic day by day,

however one sees no hope on any improvement.

Metro Project was stuck for years together, now

gaining some momentum but the implementation

date will be a big question mark. There is no

concrete plan for improving Public Transport. No

matter how many flyovers are built, they will not

sustain the heavy traffic of the ever exploding

population considering the migration to the city.

The Civic authorities need to give serious thought

to the cause of Pune Traffic and list down the

implementable concrete LOA for improving the

traffic situation by focusing on Public Transport.

This would not only reduce the traffic congestion

but contribute largely to reducing fuel

consumption, carbon emissions, environment

pollution, cost of travel and conveyance and thus

contribute to improving the public health,

diversified growth.

The events listed above are few of the events which

have provoked me into a different thought process.

India with its 30 states, a population of more than 1.2

billion people, more than 1700 political parties

(including unrecognized parties) is not short of events,

issues for deliberations, etc. India being the tolerant

country that it is, I can take privilege to express my

views on the subjects that touch my heart. Well, the

above recap excites me and induces me to look

forward to the eventful year of 2016.

We at Bizsol wish each one of you a very Happy &

Prosperous New Year!!! Let the New Year bring you

lots of happiness and success which shall persist in

years to come.

Thank you.

Monica Joshi


5

GST CORNERBy CMA A. B. Nawal

January 2016

It is stated that "Man Proposes & God Disposes". In India

each citizen is eagerly waiting for simplified Tax Reform,

which will attract investment and also create an employment

opportunity through Make in India movement. Mission

Make in India will never successful until following mantras

have not been adopted and become the part of system /

culture of the Nation:

a. Cost Competitiveness

b. Tax Reforms

c. Ease of doing business

d. Digital India

It was expected priorities of the nation will be given

importance over the political priorities but unfortunately

we have seen how democratic process has been mis-

utilized. It is surprising 40 to 50 MPs of Upper House of

Indian National Congress have totally stalled the progress

and hope of GST to be implemented w.e.f. 1.04.2016 has

been vanished. In spite of the facts economist claim and

implementation of GST will improve the GDP by 1.5% to

2%, still different issues have taken the priorities over the

national priorities.

Meanwhile, Model GST Law which is under discussion

was leaked through hosting the same on website of UP

Government and immediately it was declared by Mrs.

Rashmi Verma - Special Secretary, Department of

Revenue that the report, which has been put on website of

UP Govt. is not official report but thereafter number of

changes have taken place in the series of discussion with

State and Central Govt. officials. In spite of the said fact,

it is felt to discuss the important point of the said report

and represent Govt Officials w.r.t. difficulties which will be

faced by the Trade and Industries and thereafter an attempt

has been made to discuss important features.

1. Draft GST Law (CGST, SGST & IGST Law) will have

number of similar provisions which was prevailing either

in Central Excise Act 1944 & rules made thereunder,

Finance Act 1994 & Rules made thereunder for Service

Tax and State VAT Acts. In addition to that some

provisions of Customs Act 1962 & Rules made

thereunder have also been imported in the Draft Law

and therefore Draft GST Law is not "Old Wine in the

New Bottle" but it is the "Blend of Old & New Wine" or

if some of the provisions remains as it is, it can be

considered as "Cocktail" and will have the "Kick" to

the Trade & Industries.

2. Fortunately, "Meaning of Supply" has been provided

in Sec 3 of the said Law, which is the foundation of

GST Law. Earlier self-supply of goods and services

without consideration were included in the Schedule I

of the said Law, but it is understood that the same has

been taken it out otherwise it might have created lot of

negative impact on Trade & Industries.

3. Time & Place of Supply has been given and it seems

that person who are dealing in Goods & Services on

"PAN India Basis" they will have to obtain registration

in each State, otherwise there may be a cascading

effect of the taxes.

4. Valuation of goods or services without consideration

will be the challenge, since parallel provisions of

Customs Act 1962 and Rules made thereunder has

been incorporated in the Draft GST Law.

5. Fortunately, consensus is emerging for not introducing

1% additional tax for Inter-State supply of goods &

services irrespective of for consideration or without

consideration. Hope, this should prevail, since it is

against the principle of GST.

6. Draft Business Process Reports on Registration,

Payment, Refund & Returns has been put on the public

domain and recommendations made by public are

under discussion and hope these will be incorporated

in Model GST.

7. Blacklisting provisions of the Tax Payer will be real

hardship, since trigger for blacklisting, which has bene

given in Business Process Reports are normal

anomalies of trade & industries and hence such harsh

provisions needs to be deleted.

8. Existing exclusions in the definition of Input & Input

Services of Cenvat Credit Rules 2004 has been

retained, which will be hurdle for not having the

cascading effect of taxes.

9. Existing provisions of offences, penalties, prosecutions

and recoveries of Central Excise Act has been retained

in the Model GST Law which will cause un-necessary

harassment to the trade & industries.

10. Transitional provisions for carry forward of existing

balances of taxes i.e. credit is welcome provision.

However, deemed credit provisions on stock in absence

of duty paying documents will be required.


6

We give below existing provisions which have been carried forward in the Draft Model GST Law:

Provisions of Central Excise Act, 1994:

Section/Rule Provision Section in Draft Act

Section 3, Central Excise Act, 1944 Rate of Tax as per the Schedule Section 7(1)to the Act

Section 3A , Central Excise Act, 1944 Compounded levy Section 8

Section 2(f)(iii), Central Excise Act, 1944 Manufacturer (in GST Taxable Section 9person)

Section 4, Central Excise Act, 1944 Valuation - Transaction value Section 17(2)

Section 4A, Central Excise Act, 1944 Valuation - MRP/Retail Price Section 17(5)Valuation method

Section 11A, Central Excise Act, 1944 Demand Section 20A

Section 11AC, Central Excise Act, 1944 Penalty Section 20A

Section 11AC, Central Excise Act, 1944 Limitation Period Section 20A

Section 11D, Central Excise Act, 1944 Recovery of duty Section 11D

Section 14A & 14AA, Central Excise Special Audit Section 55Act, 1944

Section 34A,Central Excise Act, 1944 Confiscation or penalty Section 62

Section 12F,Central Excise Act, 1944 Power of inspection, search and Section 68seizure

Section13, 18, 19 & 20, Power to arrest Section 69Central Excise Act, 1944

Section 14, Central Excise Act, 1944 Power To summon Section 70

Section 15B, Central Excise Act, 1944 Penalty for failure to furnish Section 76information return

Section 12C, Central Excise Act, 1944 Consumer Welfare Fund Section 78

Section 12E, Central Excise Act, 1944 Powers of officers Section 79

Provisions of Central Excise Rules 2002 :


Central Excise Valuation (determination Valuation GST Valuation (Determi-of price of excisable goods) Rules, 2000 nation of the Value of Supply

of Goods and Services)Rules, 2016

Rule 21, Central excise rules, 2002 Remission of duty Section 19

Rule 11, Central excise rules, 2002 Invoice Section 30

Rule 12, Central excise rules, 2002 Returns Section 36

Rule 12, Central excise rules, 2002 Late fee for filing of return Section 45

Rule 8, Central excise rules, 2002 Payment of tax, penalty, interest Section 47

Rule 6, Central excise rules, 2002 Self Assessment Section 47

Rule 26, Central excise rules, 2002 Offences and Penalties Section 56

Rule 27, Central excise rules, 2002 General Penalties Section 57

Rule 27, Central excise rules, 2002 Confiscation of goods and levy of Section 60penalty


7

Rule 22, Central excise rules, 2002 Access to business premises Section 71

Rule 3(1), CENVAT credit rules, 2004 Input Tax Credit Section 18(1)

Rule 2(a),(k),(l) & Rule 6, CENVAT Eligibility of Input Tax credit Section 18(2) & Section 18(9)credit rules, 2004

Rule 6, CENVAT credit rules, 2004 Reversal of Credit Section 18(3)

Rule 4, CENVAT credit rules, 2004 Utilization of credit Section 18(5)

Rule 5, CENVAT credit rules, 2004 Refund of cenvat credit Section 18(7)

Rule 9(1), CENVAT credit rules, 2004 Conditions for availment of credit Section 18(10)

Rule 10, CENVAT credit rules, 2004 Transfer of cenvat credit balance in Section 18(11)certain cases

Rule 14, CENVAT credit rules, 2004 Recovery of CENVAT credit wrongly Section 39taken or erroneously refunded

Rule 15, CENVAT credit rules, 2004 Penalty for wrong utilization of credit Section 56

Provisions of Finance Act, 1994 :


Section 67,Finance Act 1994 Valuation Section 17(1)

Section 71(3)(a),Finance Act 1994 Submission of returns through Tax Section 46Return Preparers

Section 70,Finance Act 1994 Self-Assessment Section 49

Section 72(a),Finance Act 1994 Assessment of non-filers of returns Section 46

Section 72(b),Finance Act 1994 Summary assessment in certain Section 53special cases

Section 72A,Finance Act 1994 Special Audit Section 55

Provisions of Service Tax Rules, 1994 :


Rule 2(1)(d), Service Tax Rules, 1994 Person liable to pay tax Section 9

Rule 5, Service Tax (Determination Valuation Rule 8 of GST Valuationof Value) Rules, 2006 (Determination of the Value

of Supply of Goods andServices) Rules, 2016

Rule 6(7B), Service Tax Rules, 1994 Valuation Rule 8 of GST Valuation(Determination of the Valueof Supply of Goods andServices) Rules, 2016

Rule 4(5), Service Tax Rules, 1994 Deemed registration Section 26(8)

Rule 4A, Service Tax Rules, 1994 Invoice Section 30

Rule 5, Service Tax Rules, 1994 Maintenance of records Section 32

Rule 7, Service Tax Rules, 1994 Returns Section 36

Rule 7C, Service Tax Rules, 1994 Late fees for late filing of return Section 45

Rule 6, Service Tax Rules, 1994 Payment of tax Section 47


8

Provisions of Customs Valuation (Determination of value of Imported Goods) Rules, 2007 :

Section / Rule Provision Section in Draft Act

Rule 2,Customs Valuation (Determi- similar and identical goods Rule 2 of GST Valuationnation of value of Imported Goods) (Determination of the ValueRules, 2007 of Supply of Goods and

Services) Rules, 2016

Rule 4&5,Customs Valuation (Determi- Valuation Rule 4 of GST Valuationnation of value of Imported Goods) (Determination of the ValueRules, 2007 of Supply of Goods and


Rule 8 ,Customs Valuation (Determi- Computed value method Rule 5 of GST Valuationnation of value of Imported Goods) (Determination of the ValueRules, 2007 of Supply of Goods and


Rule 9 ,Customs Valuation (Determi- Residual method Rule 6 of GST Valuationnation of value of Imported Goods) (Determination of the ValueRules, 2007 of Supply of Goods and


Rule 12 ,Customs Valuation (Determi- Rejection of declared value Rule 7 of GST Valuationnation of value of Imported Goods) (Determination of the ValueRules, 2007 of Supply of Goods and

Services)Rules, 2016

Provisions of MVAT Act, 2002/ CST Act, 1956 :


Section 6, CST Act,1956 Levy on all intra-state supplies of Section 7goods and services

Section 8, CST Act,1956 Rate of Tax as per the Schedule to Section 7the Act

Section 2(8), MVAT Act,2002 Dealer Section 9

Section 3/4, CST Act,1956 Nature of supply Section 14

Section 63, MVAT Act,2002 Records Section 32

Rule 17(4)(d), MVAT Rules, 2005 J1 - J2 return Section 36

Rule 17, MVAT Rules, 2005 Returns Section 36

Section 61, MVAT Act,2002 Annual Return Section 43

Section 20, MVAT Act,2002 Late fee Section 45

Section 31, MVAT Act,2002 TDS Section 2(41)

Section 20, MVAT Act,2002 Self-Assessment Section 49

Section 23(3), MVAT Act,2002 Assessment of non-filers of returns Section 51

Section 23(4), MVAT Act,2002 Assessment of unregistered persons Section 52

Section 23, MVAT Act,2002 Summary assessment in certain Section 53special cases

Section 22, MVAT Act,2002 Audit Section 54

Section 22, MVAT Act,2002 Cognizance of offences Section 64


9

It can be appreciated from above that most of the

provisions of existing law will be in the Draft GST Law.

In other words, the stricter provisions w.r.t. Tax,

Administration and Compliance of either laws has

been incorporated in Draft GST Law. Since there is

no any liberal provision in either law, no liberal

provisions has been invented. Time will decide

whether it will be ease of doing business or otherwise.

Nothing concrete has been mentioned in Draft GST

Law for adjudication except National Tax Tribunal,

but whether assessment and first appeal will have

combined dispute resolution system for CGST, IGST

and SGST is not clear and that will be the test of

"Whether there will be Acche Din OR continued to be

the same"…

Let us hope, Model Draft GST law will be put on

Public Domain by January 2016 end and 122nd

Constitutional Amendment Bill will be tabled again in

Upper House either in the budget session or

subsequent to the budget session in month of

April 2016, but one thing is definite, GST is not going

to be implemented w.e.f. 1st April 2016 and time will

decide whether it will be in 2016 or w.e.f. 1st April

2017.


10

CUSTOMS

Notifications

Tariff:

• Exemption on Machinery, equipment,

instruments, fittings, devices, scientific

apparatus, components, spares, tools,

accessories, computer hardware, computer

software, technical know-how (in the form of

documents and drawings in the printed media),

castings, forgings, pipings, tubings, raw materials

and consumables required for the purpose of

ATVP, Ministry of Defense as provided in

Notification No. 39/1996 Cus dated 23rd July

1996 has been extended for further period.

Previously exemption was available till 31st

December 2015 only.

[Notification No. 56/2015-Cus dated 11th

December -2015]

• Duty rate for following goods imported from Japan

has been changed as below,

o 84082020 - Engines having cylinder capacity

exceeding 250CC : 5.94 %

o 870840 - Gear Boxes and Parts thereof :

8.13%


December -2015]

• Duty rates for goods imported& originating from

ASEAN Countries have been changed for

specified goods.[Notification No. 58/2015-Cus

dated 30th December -2015]

• Duty rates for goods imported & originating from

Malaysia have been changed for specified goods.


December -2015]

• Duty rates for Goods imported from Korea RP

has been changed for specified goods


December -2015]

• Duty rate of 5% imposed on item ‘Iron ore pellets’

with chapter heading 2601 12 10 which earlier

exempted vide Notification No.27/2011 dated 1st

Mar 2011.

[Notification No. 1/2016-Cus dated 4th Jan

2016]

• Exemption has been granted to the imported

items of Chapter 84 or any other heading having

description as Goods Specified in List 13 required

in connection with petroleum operations

undertaken under specified contracts under the

Marginal Field Policy (MFP). [Notification No.

2/2016-Cus dated 6th Jan 2016]

Non-Tariff:

• Village Janoli-Bhagola, Tehsil Palwal has been

recognized as Customs Port Unloading of

imported goods and loading of export goods.

• Powarkheda, District Hoshangabad has been

recognized as Customs Port Unloading of

imported goods and loading of export goods.

• Pantnagar, District Udham Singh Nagar,

Uttarakhand has been recognized as Customs

Port Unloading of imported goods and loading

of export goods.

[Notification No. 137/2015-Cus (NT) dated 7th

December -2015] & [Notification No. 145/

2015-Cus(NT) dated 18th December -2015] &

[Notification No. 148/2015-Cus (NT) dated

29th December -2015] respectively.

• Now CMA’s are also entitled for obtaining license

under Customs Broker Licensing Regulations

2013. [Notification No. 1/2016-Cus dated 4th

Jan 2016]

• Tariff Value of following Imported goods have

been further amended as given below:


11

Sr. Chapter/ heading/ Description of Tariff value US $

No. sub-heading / tariff item goods (Per Metric Tonne)

(1) (2) (3) (4)

1 1511 10 00 Crude Palm Oil 557

2 1511 90 10 RBD Palm Oil 581

3 1511 90 90 Others - Palm Oil 569

4 1511 10 00 Crude Palmolein 595

5 1511 90 20 RBD Palmolein 598

6 1511 90 90 Others -Palmolein 597

7 1507 10 00 Crude Soya bean Oil 733

8 7404 00 22 Brass Scrap (all grades) 2904

9 1207 91 00 Poppy seeds 2722

Sl.No. Chapter/ heading/ Description of Tariff value

sub-heading/tariff item goods (US $)

(1) (2) (3) (4)

1 71 or 98 Gold, in any form, in respect of which the 345 per 10 grams

benefit of entries at serial number 321

and 323 of the Notification No. 12/2012-

Customs dated 17.03.2012 is availed

2 71 or 98 Silver, in any form, in respect of which the 452 per kilogram

benefit of entries at serial number 322 and

324 of the Notification No. 12/2012-

Customs dated 17.03.2012 is availed

Sl.No. Chapter/ heading/ Description of Tariff value

sub-heading/tariff item goods (US $ Per Metric Tons )

(1) (2) (3) (4)

1 80280 Areca nuts 2558

[Notification No. 150/2015-Cus (NT) dated 31th December 2015]

Anti-Dumping Duty:

• Definitive Anti-Dumping duty is imposed on

Melamine Tableware and Kitchenware products

originating in, or exported from,People's Republic

of China, Thailand and Vietnam. It shall remain

in force from 4th December 2015 to 3rd

December 2020, unless revoked earlier.

Notification No. 55/2015-Customs (ADD)



Phthalic Anhydride originating in, or exported

from,Japan and Russia. It shall remain in force

from 4th December 2015 to 3rd December 2020,

unless revoked earlier. [Notification No. 56/

2015-Customs (ADD) dated 4th December -

2015]

• Definitive Anti-Dumping duty is re-imposed on

all kinds of plastic processing or injection

moulding machines, also known as injection

presses used for processing or moulding of

plastic materials, having clamping force not less

than 40 tonnes and not more than 1000

tonnes,originating in or exported from, People's

Republic of China. It shall remain in force from


12

4th December 2015 to 3rd December 2020,

unless revoked earlier. [Notification No. 57/

2015-Customs (ADD) dated 4thDecember -

2015]


Methylene Chloride" also known as

Dichloromethane originating in, or exported

from,People's Republic of China and Russia. It

shall remain in force from 8th December 2015

to 7th May 2016, unless revoked earlier.

[Notification No. 58/2015-Customs (ADD)



Gliclazideoriginating in or exported from,

People's Republic of China. It shall remain in

force from 8th December 2015 to 7th December

2020, unless revoked earlier. [Notification No.

59/2015-Customs (ADD) dated 8thDecember

-2015]


Purified Terephthalic Acidincluding its variants

"Medium Quality Terephthalic Acidand Qualified

Terephthalic Acid,originating in or exported

from,People's Republic of China, Iran, Indonesia,

Malaysia and Taiwan. It shall remain in force from

10th December 2015 to 9th May 2016, unless

revoked earlier. [Notification No. 60/2015-

Customs (ADD) dated 10th December -2015]

• Definitive Anti-Dumping duty is imposed on Cold

Rolled Flat Products of Stainless Steel originating

in, or exported from,People's Republic of China,

Korea, European Union, South Africa, Taiwan

(Chinese Taipei), Thailand and United States of

America (USA). It shall remain in force from 11th

December 2015 to 10th December 2020, unless


Customs (ADD) dated 11th December -2015]


Albendazoleoriginating in or exported

from,People's Republic of China, Korea,

European Union, South Africa, Taiwan (Chinese

Taipei), Thailand and United States of America

(USA). It shall remain in force from 11th

December 2015 to 10th December 2020, unless


Customs (ADD) dated 14thDecember -2015]

Safeguards Duty:

• No new Notifications.

Circulars:

• The board has revised instruction on cases

investigated by DRI which shall be assigned to

Additional Director General (Adjudication),DRI as

below:-

(i) Cases involving duty of Rs. 5 Crores and

above;

(ii) Group of cases on identical issues involving

aggregate duty of Rs. 5 crore and more;

(iii) Cases involving seizure value of Rs 25 Crore

or more;

(iv) Cases involving wrong availment of export

incentives where the export incentives

wrongly availed is Rs 5 Crore or more;

(v) Group of case on identical issues involving

wrong availment of export incentives

aggregating to Rs 5 Crore or more;

(vi) Cases of overvaluation of import where

overvaluation is Rs 25 Crore or more; and

(vii) DRI case pending with erstwhile

Commissioner (Adjudication).

[Circular No. 30/2015 dated 4th December -

2015]

Instructions:

• Monetary limits for filing appeals by the

Department before CESTAT/High Courts and

Supreme court has been revised as below,

S.No. Appellate Forum Monetary Limit Earlier Limit

1 CESTAT Rs. 10,00,000/- Rs. 5,00,000/-

2 HIGH COURTS Rs. 15,00,000/- Rs. 10,00,000/-

3 SUPREME COURT Rs. 25,00,000/- Rs. 25,00,000/-

Further it is also instructed that adverse judgment

related to classification & refunds issues which

are of legal and/or recurring nature should be

contested irrespective of the amount involved.

[Instruction No.F.No. 390/Misc./163/2010

dated 17/12/2015]

• It has been instructed to form the committee of

Principal Chief Commissioners/Chief


13

commissioner for withdrawal of cases pending

before High Court / CESTAT on the basis of

earlier Supreme Court's decision on the identical

matters. [Instruction No.F.No. 390/Misc./163/

2010 dated 17/12/2015]

CENTRAL EXCISE:

Notifications:

Tariff:

• Excise duty on Petrol increased by 37 paise per

litre and on diesel by Rs.2 per litre from 1st Jan

2015. [Notification No. 01/2016-CE,dated 1st

Jan 2016]

Non-Tariff:

• Due date for payment of excise duty for the month

of November is extended to 20th Nov for an

assessees in the State of Tamil Nadu and the

Union Territory of Puducherry (except Yanam

and Mahe).

[Notification No. 25/2015-CE(N.T.),dated 9th

Dec 2015; Notification No.26/2015-CE(N.T.),

dated 18th Dec 2015]

Circulars:

• The new units or units undertaking located in

North Eastern States having substantial

expansion after 01.12.2014 and upto the cut-off

date of 31.03.2017 shall continue to be eligible

for excise duty exemption under notification no.

20/2007-CE dated 25.04.2007 subject to the

conditions specified thereunder .This is in line

with earlier circular issued for units located in

Himachal Pradesh and Utterakhand.

[Circular No.1012/19/2015-CX, dated 2nd Dec

2015]

Instructions:

• Tariff Conference of Central Excise was held in

Chandigarh on 28th& 29th Oct 2015 to discuss

various issues parting to various contentious

issues in the matters pertaining to Excise,

CENVAT Credit, Duty structure, etc. Noted at

various commissionerate across India. The

conference concluded with view and line of action

by the department. The minuets of this

conference was released for the benefit of tread

and industry.Some of the issues discussed as

under;

- Retention of Sales Tax Collected from

Customers and Inclusionthereof in

Transaction Value

- Fixation of special rate representing the

actual value addition under Area based

Exemption Scheme

- Reversal of Credit on Common Input

Services

- Balance of Education cess and secondary

and Higher Education cess lying in the

Cenvat Credit account

- Whether the benefit of Rule 5of Cenvat

Credit Rules, 2004, can be extendedto

clearances made to 100% EOUs

(deemedexports)

- Reversal of Cenvat Credit in respect of

Service tax paid on Input Services

- Admissibility of Cenvat Credit on Service Tax

Paid on Sales Agency Commission Service

- Rebate of Duties Paid on Raw Materials &

Services Used in Manufacture of Exempted

Goods

- No penalty for non-filing of NIL return

[Instruction No.F.No.96/85/2015-CX.I, dated

7th Dec 2015]

• Monetary limits for filing appeals by the

Department before CESTAT/High Courts and

Supreme Court in Customs Excise & Service Tax

matters.These limits will applicable to all pending

appeals in High Courts/CSTAT.

The monetary limits are as for filing appeals are

follows;

S.No. Appellate Forum Monetary Limit Earlier Limit

1 CESTAT Rs.10,00,000/- Rs.5,00,000/-

2 HIGH COURTS Rs.15,00,000/- Rs.10,00,000/-

3 SUPREME COURT Rs.25,00,000/- Rs.25,00,000/-

[Instruction No.F.No.390/Misc./163/2010-JC,

dated 17th Dec 2015, F.No.390/Mics./163/

2010-JC, dated 1st Jan 2016]


14

• Instruction has been issued for withdrawal of

cases pending before HC/CESTAT on the basis

of earlier Supreme Court's decision on the

identical matters.

[Instruction No.F.No.390/Misc./67/2014-JC,


• In view of alarming increase in the number of

orders passed by CESTAT/Courts imposing

penalty on departmental officers/department, all

Principal Chief Commissioners / Chief

Commissioners should sensitize the adjudicating

authoritiesabout the issue of imposition of costs

by the Tribunals due to poor quality of

theadjudications.

[F. No.390/CESTAT/69/2014-JC, dated 22nd

Dec 2015]

LBT:• No new notification.

SERVICE TAX

Notifications:• The Due date for payment of service tax for an

assessee in the State of Tamil Nadu for the month

of November 2015 has been extended to the

20th day of December, 2015. Further the same

provision was extended to Pondicherry, since

Pondicherry to along with Tamil Nadu has

suffered due to flood.

[Notification No. 26/2015-ST, Dated 9th

December 2015, Notification No. 27/2015-ST,

Dated 18th December 2015]

Circular:

• Field formation was of the view that job work

charges received by apparel exporters from third

party are amounting to supply of manpower and

not job work amounting to manufacture. Circular

has been issued differentiating what constitutes

job work amounting to manufacture and

manpower supply. Accordingly, field formation

has been instructed to review agreement/contract

so as to decide whether the transaction is falls

under manpower supply or job work.

[Circular No.190/9/2015 Service Tax Dated

15th December 2015]

FOREIGN TRADE POLICY

Notifications:• There is no requirement for recommendation

from DCGA for import of reconditioned/Second

Hand Aircraft parts w.e.f. 16th December 2015.

[Notification No.27/2015-20 dated 16th

December 2015]

• M/s. HRD Diamond Institute Private Limited,

Mumbai, Maharashtra, India is added as agency

permitted to import duty free diamonds for

certification/grading and subsequent re-export,

subject to conditions mentioned in paragraph

4.75 of Handbook of Procedures 2015-20 and

other applicable provisions of the law in this

regard.


December 2015]

• Minimum Export Price has been removed for

Onions. All varieties of onions can be exported

without any Minimum Export Price (MEP).


December 2015]

Circulars:

• Since there was downfall in Export for some

sectors, regional officers are requested to

consider &re-fix the Annual Average Export

Obligation for the year 2014-15 in case of EPCG

Holders for EO fulfillment.

[Policy Circular No. 4/2015-20 dated the 16th

December 2015]

Public Notices:• Shipping bills where declaration of intent 'Y' has

not been marked and 'N' has been ticked

inadvertently in the 'reward item box' while filing

shipping bills in Customs for exports made

between 01.06.2015 to 30.09.2015, will also be

considered for claiming the benefit subject to

following procedure as per Public Notice.

[Public Notice No. 47/2015-20 dated the 8th

December 2015]

• SION Norms for All Types Steel Truck Radial

Tyres (Tube Type) at Sr. No. A1663, has been

changed. [Public Notice No. 49/2015-20 dated

the 17th December 2015]


15

• Due to duplication of country "Panama" in Group

B & C in MEIS schedule, "Panama" has been

deleted from Country Group-C of Table 1 of

Appendix 3B-MEIS Schedule with effect from

01.04.2015. [Public Notice No.51/2015-20

dated the 28th December2015]

Trade Notices:• It has been clarified that Indian Kabuli chickpeas

is eligible under Focus Product Scheme.(2009-

2014).All RAs are advised to allow FPS benefit

on export of Indian Kabuli chickpeas under the

above description and dispose-off all pending

applications accordingly. [Trade Notice No. 10/

2015 dated the 10th December 2015]

INCOME TAX:

Circular:• The CBDT has, through this circular, provided

the rates for deduction of income-tax from the

payment of income chargeable under the head

"Salaries" during the financial year 2015-16 and

explained certain provisions of the Income-tax

Act, 1961 and Income-tax Rules, 1962. [Circular

no. 20/2015 dated 2nd December 2015]

• Appeals/SLPs shall not be filed in cases where

the tax effect does not exceed the monetary limits

given hereunder:-

Sr. Appeals in Income-tax Monetary Limit

No. matters (in Rs)

1 Before Appellate Tribunal 10,00,000/-

2 Before High Court 20,00,000/-

3 Before Supreme Court 25,00,000/-

[Circular no. 21/2015 dated 10th December

2015]

• Interest on FDR's, made in the name of the

Registrar General of the court or the depositor

of the fund on the directions of the court, will not

be subject to TDS till the matter is decided by

the Court. However, once the court decides the

ownership of the money lying in the fixed deposit,

the provisions of section 194A will apply to the

recipient of the income. [Circular no. 23/2015

dated 28th December 2015]

Notifications:• Simplified procedure for form no. 15G & 15H has

been notified by CBDT wherein the same can

be obtained electronically. [Notification no. 04/

2015 dated 1st December 2015]

• CBDT relaxes conditions for furnishing of Form

15CA & Form 15CB

- No Form 15CA and 15CB will be required

to be furnished by an individual for

remittance which do not requiring RBI

approval under its LiberalisedRemittance

Scheme (LRS).

- Further the list of payments of specified

nature mentioned in Rule 37 BB which do

not require submission of Forms 15CA and

15CB has been expanded from 28 to 33

including payments for imports. Following

are the five new exempt payment types :-

1. Advance payment against imports

2. Payment towards imports-settlement

of invoice

3. Imports by diplomatic missions

4. Intermediary trade

5. Imports below Rs. 5,00,000-(For use

by ECD offices)

- A CA certificate in Form No. 15CB will be

required to be furnished only in respect of

such payments made to non-residents which

are chargeable to tax and the amount of

payment during the year exceeds Rs. 5 lakh.

- Prescribed form No. 15CC for Quarterly

statement to be furnished by an authorised

dealer in respect of foreign remittances

made by him.

The amended Rules will become applicable from

01.04.2016. [Notification no. 93/2015 dated

16th December 2015]

• Revised rules & forms related to quoting of PAN

for various transactions have been issued which

are effective from 01/01/2016. The detailed list

of transaction can be viewed from the below given

notification. [Notification no. 95/2015 dated

30th December 2015]


16

Sl.No. Nature of transaction Value of transaction

(1) (2) (3)

1. Sale or purchase of a motor vehicle or vehicle, as defined in All such transactions.clause (28) of section 2 of the Motor Vehicles Act, 1988 (59of 1988) which requires registration by a registering authorityunder Chapter IV of that Act, other than two wheeled vehicles.

2. Opening an account [other than a time-deposit referred to at All such transactions.

Sl. No.12 and a Basic Savings Bank Deposit Account] with a

banking company or a cooperative bank to which the Banking

Regulation Act, 1949 (10 of 1949), applies (including any bank

or banking institution referred to in section 51 of that Act).

3. Making an application to any banking company or a All such transactions.

co-operative bank to which the Banking Regulation Act, 1949

(10 of 1949), applies (including any bank or banking institution

referred to in section 51 of that Act) or to any other company

or institution, for issue of a credit or debit card.

4. Opening of a demat account with a depository, participant, All such transactions.

custodian of securities or any other person registered under

sub-section (1A) of section 12 of the Securities and Exchange

Board of India Act, 1992 (15 of 1992).

5. Payment to a hotel or restaurant against a bill or bills at any Payment in cash of an amount

one time. exceeding fifty thousand rupees.

6. Payment in connection with travel to any foreign country or Payment in cash of an amount

payment for purchase of any foreign currency at any one time. exceeding fifty thousand rupees.

7. Payment to a Mutual Fund for purchase of its units. Amount exceeding fifty thousand rupees.

8. Payment to a company or an institution for acquiring Amount exceeding fifty thousand rupees.

debentures or bonds issued by it.

9. Payment to the Reserve Bank of India, constituted under Amount exceeding fifty thousand rupees.

section 3 of the Reserve Bank of India Act, 1934 (2 of 1934)

for acquiring bonds issued by it.

10. Deposit with a banking company or a co-operative bank to Deposits in cash exceeding fifty

which the Banking Regulation Act, 1949 (10 of 1949), applies thousand rupees during any one day.

(including any bank or banking institution referred to in section

51 of that Act).

11. cheques from a banking company or a co-operative bank to Payment in cash for an amount

which the Banking Regulation Act, 1949 (10 of 1949), applies exceeding fifty thousand rupees during

(including any bank or banking institution referred to in section any one day.

51 of that Act).

12. A time deposit with, (i) a banking company or a co-operative

bank to which the Banking Regulation Act, 1949 (10 of 1949),

applies (including any bank or banking institution referred to in

section 51 of that Act); (ii) a Post Office; (iii) a Nidhi referred

to in section 406 of the Companies Act, 2013 (18 of 2013); or


17

(iv) a non-banking financial company which holds a certificate Amount exceeding fifty thousand rupees

of registration under section 45-IA of the Reserve Bank of or aggregating to more than five lakh

India Act, 1934 (2 of 1934), to hold or accept deposit from rupees during a financial year.

public.

13. Payment for one or more pre-paid payment instruments, as Payment in cash or by way of a bank

defined in the policy guidelines for issuance and operation of draft amount aggregating to more than

pre-paid payment instruments issued by Reserve Bank of fifty thousand rupees in a financial year.

India under section 18 of the Payment and Settlement

Systems Act, 2007 (51 of 2007), to a banking company or a

co-operative bank to which the Banking Regulation Act, 1949

(10 of 1949), applies (including any bank or banking institution

referred to in section 51 of that Act) or to any other company

or institution.

14. Payment as life insurance premium to an insurer as defined in Amount aggregating to more than fifty

clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938). thousand rupees in a financial year.

15. A contract for sale or purchase of securities (other than Amount exceeding one lakh rupees per

shares) as defined in clause (h) of section 2 of the Securities transaction.

Contracts (Regulation) Act, 1956 (42 of 1956).

16. Sale or purchase, by any person, of shares of a company not Amount exceeding one lakh rupees per

listed in a recognised stock exchange. transaction.

17. Sale or purchase of any immovable property. Amount exceeding ten lakh rupees or

valued by stamp valuation authority

referred to in section 50C of the Act at

an amount exceeding ten lakh rupees.

18. Sale or purchase, by any person, of goods or services of any Amount exceeding two lakh rupees per

nature other than those specified at Sl. No. 1 to 17 of this transaction:

Table, if any.

VAT

Trade Circular:• Digitally signed Registration certificate is available

to the dealers to whom registration certificates

have been granted on or after 22nd December

2015.

Irrespective of the above facility, copy of

registration certificate will also be mailed to the

applicant. [Circular 19 T 2015 dated 21st

December 2015]

SEZNo new Notifications.

COMPANY LAW

Notifications:• Now according to provisions of Companies (Audit

and Auditors) Amendment Rules, 2015-

1. If an auditor of a company, in the course of

the performance of his duties as statutory

auditor, has reason to believe that an

offence of fraud, which involves or is

expected to involve individually an amount

of rupees one crore or above,is being or

has been committed against the company

by its officers or employees, the auditor shall

report the matter to the Central

Government.

The details as given in notification have to

be followed.


18

2. The provision of this rule shall also apply,

mutatis mutandis, to a Cost Auditor and a

Secretarial Auditor during the performance

of his duties under section 148 and section

204 respectively.

Accordingly e-Form ADT-1 and ADT-4 has been

substituted. [Notification No. G.S.R 972 ( E)


• The aforesaid provisions w.r.t. reporting of frauds

by an auditor vide amended rules and Section

134 & 177 will be effective from 14th Dec 2015.

[Notification No. S.O. 3388/(E) dated 14th Dec

2015]

• New Rule 6A stating provisions w.r.t. Omnibus

approval for related party transactions on annual

basis has been inserted vide Companies

(Meetings of Board and its Powers) Rules, 2O14.

[Notification No. G.S.R ( E) dated 14th Dec

2015]

Circulars:• Further Relaxation of additional fees and

extension of last date of Annual Filing of the

Form following forms granted to the state of

Tamilnadu& Union Territory of Puduchery.

1. Annual Return - Form MGT-7: Original due

date: 60 days from the date of AGM.

Reviseddue date:30th Jan 2016

2. Financial Statement (Non XBRL) - Form

AOC-4: Original due date: 30 days from the

date of AGM. Revised due date: 30th Jan

2016.

3. Consolidated Financial Statements - Form

AOC (CFS)Revised due date: 30th Jan

2016.

4. Financial Statement (XBRL) - Form AOC-4

XBRL: Original due date: 30 days from the

date of AGM. Revised due date: 30th Jan

2016

[General Circular No.16/2015 dated 30th Dec

2015]

FEMA/RBI

NotificationsNo new Notifications

Circulars :

Interest Equalisation Scheme on Pre and Post

Shipment Rupee Export Credit:

As per DBR.Dir.BC.No.62/04.02.001/2015-16, the

Government of India has announced the Interest

Equalisation Scheme on Pre and Post Shipment

Rupee Export Credit to eligible exporters, effective

from April 1, 2015.

Procedure for passing on the benefit of interest

equalisation to exporters:

For the period April 1, 2015 to November 30, 2015,

banks shall identify eligible exporters as per the

Government of India scheme and credit their accounts

with the eligible amount of interest equalisation.

From December 2015 onwards, banks shall reduce

the interest rate charged to the eligible exporters.

Separate guidelines on interest rates on advances

under interest equalization schemes are provided by

Government of India to the banks.

The interest equalisation benefit will be available from

the date of disbursement up to the date of repayment

or up to the date and beyond which the outstanding

export credit becomes overdue. However, the interest

equalisation will be available to the eligible exporters

only during the period the scheme is in force.

Procedure for claiming reimbursement of interest

equalisation benefit already passed on to eligible

exporters:

From Devember-15 onwards, the sector-wise

consolidated monthly reimbursement claim for interest

equalization, should be submitted in original within

15 days from the end of the respective month, with

bank's seal and signed by authorised person, in the

prescribed format.

The claims should be accompanied by an External

Auditor's Certificate (with stamp and membership

number) certifying that the claim for interest

equalisation in Rupees for the specified month-end

has been verified and found to be strictly in

accordance with the provisions of the Government

scheme enclosed with the circular DBR.Dir.BC.No.62/

04.02.001/2015-16 dated December 4, 2015.

The reimbursement of interest equalisation claim will

be made as and when the funds are received from


19

Government of India.

[RBI/2015-16/259, DBR.Dir.BC.No.62/04.02.001/

2015-16]

Guidelines on trading of Currency Futures and

Exchange Traded Currency Options in

Recognized Stock Exchanges - Introduction of

Cross-Currency Futures and Exchange Traded

Option Contracts:

As per A.P. (DIR Series) circular No. 147 and circular

no. 148, persons resident in India and persons resident

outside India viz., foreign portfolio investors (FPIs)

are permitted to participate in currency futures and

exchange-traded currency options market in India.

But these participants, i.e., residents and eligible non-

resident market participants were permitted to trade

only in USD/INR, EUR/INR, GBP/INR and JPY/INR

currency futures contracts and USD/INR currency

option contract in recognized stock exchanges.

It has now been decided by the RBI to permit the

recognized stock exchanges to offer cross-currency

futures contracts and exchange traded option

contracts in the currency pairs of EUR/USD, GBP/USD

and USD/JPY.

Recognized stock exchanges are also permitted to

offer exchange-traded currency option contracts in

EUR/INR, GBP/INR and JPY/INR in addition to the

existing USD/INR option contract, with immediate

effect.

• Market participants are allowed to take positions

in the cross-currency futures and exchange

traded cross-currency option contracts without

having underlying exposure, but positions are

subject to the limits, as prescribed by the

exchanges.

• The existing position limits of USD 15 million for

USD/INR contracts and USD 5 million for non

USD/INR contracts both together and per

exchange for residents and FPIs without having

underlying exposure, shall remain unchanged.

• All other conditions remain unchanged.

[RBI/2015-16/267 A.P. (DIR Series) Circular No.

35 December 10, 2015]

Extension of Credit Facilities to Overseas Step-down

Subsidiaries of Indian Corporates:

As per circular DBOD.IBD.BC.No.96/23.37.001/2006-

07, banks in India were permitted to extend funded

and/or non-funded credit facilities to step-down

subsidiaries of the overseas subsidiaries of Indian

companies that may not be wholly owned, subject to

certain conditions.

Banks may now extend funded and/or non-funded

credit facilities to the step-down subsidiaries of Indian

companies including to those beyond the first level,

to finance the projects undertaken abroad by them.

The immediate overseas subsidiary of the Indian

company must be directly controlled by the Indian

parent company through any of the modes of control

recognised under the Indian Accounting Standards.

In addition, the Indian parent company must directly

hold a minimum 51% of its shareholding.

All the step-down subsidiaries, including the

intermediate ones, must be wholly owned subsidiary

of the immediate parent company or its entire shares

shall be jointly held by the immediate parent company

and the Indian parent company and / or its wholly

owned subsidiary. The immediate parent should,

wholly or jointly with Indian parent company and / or

its wholly owned subsidiary, have control over the step-

down subsidiary.

The banks shall make additional provision of 2% (in

addition to country risk provision that is applicable to

all overseas exposures) against standard assets

representing all exposures to the step-down

subsidiaries, to cover the additional risk arising from

complexity in the structure, location of different

intermediary entities in different jurisdictions exposing

the Indian company, and hence the bank, to greater

political and regulatory risk.

[RBI/2015-16/279 DBR.IBD.BC.No.68/23.37.001/

2015-16]


20

FX Updates

USD/INR ($)

The INR appreciated against the US Dollar following the Fed rate-hike in December 2015. The markets had alreadyfactored in the rate-hike and therefore no major downside movement in the Rupee was seen. The Fed remaineddovish and hinted at a slow pace of rate-hike, which further limited the gains in the USD. FII inflows remained intactover the month and supported the demand for the INR. The Rupee could remain range bound as investors awaitfresh cues.

EUR/INR ( )

The EUR came off from a monthly high of 74.14 levels and depreciated against the INR towards the end ofDecember, 2015. The unprecedented fall in oil prices and increasing risks to the EZ due to slowdown in the globaleconomy weighed on the demand for the Euro. Lack of fresh cues due to the short holiday across Europeanmarkets limited the movement in the pair. The INR could remain strong as demand for emerging market assets andfalling oil prices are likely to keep the Euro under pressure.

GBP/INR (£)

The Indian Rupee added major gains against the Sterling in the previous month after falling to levels as low as102.30 earlier in the month. Uncertainty over Britain's position in the European Union hurt investor morale. Increasingrisk to the country's credit worthiness due to the EU referendum further dented investor sentiment. The impendingdecision on the EU referendum and growing expectations of an interest-rate hike are likely to keep the Pound underpressure in the New Year.

JPY/INR (¥)

The Yen remained strong against the INR in the previous month. The Yen found support following the BoJ'sdecision to keep its monetary policy unchanged. An improvement in the Japanese industrial activity further supportedthe demand for the Yen. The Rupee came under some pressure following a widened fiscal deficit and a logjam inparliament, which affected decisions on key reforms. The pair is likely to remain range bound in the upcomingweeks.

Tenure USD/INR EUR/INR GBP/INR JPY/INR

Current Levels (01/01/2016) 66.13 71.90 97.63 0.5503

1 Week 66.05-66.45 71.55-72.15 97.45-97.95 0.5490-0.5515

2 Weeks 65.95-66.65 71.45-72.35 97.35-98.15 0.5475-0.5530

4 Weeks 65.85-66.85 71.30-71.45 97.15-98.25 0.5455-0.5535

Key Economic Indicators

Date Currency Event Forecast Previous

04/01/2016 GBP Manufacturing PMI 52.8 52.7

06/01/2016 USD FOMC Meeting Minutes -- --

12/01/2016 GBP Manufacturing Production -- --

12/01/2016 INR Industrial Production 4.80% 9.80%

14/01/2016 GBP Monetary Policy Summary -- --

15/01/2016 INR Balance of Trade ($) -10.1B -9.78B

21/01/2016 EUR ECB Press Conference -- --

27/01/2016 JPY Monetary Policy Statement -- --

29/01/2016 JPY BoJ Outlook Report -- --


21

CBEC Notified Exchange Rate for Conversion of Foreign Currency w. e. f,

18th December 2015 [Notification No.144/2015-Customs (N.T)

Dated 17th December 2015]

SCHEDULE - I

S.No. Foreign Currency

Rate of exchange of one unit of foreign currency

equivalent to Indian rupees

(For Imported Goods) (For Export Goods)

1 Australian Dollar 48.55 47.15

2 Bahrain Dinar 182.25 171.75

3 Canadian Dollar 48. 80 47.80

4 Danish Kroner 9.80 9.55

5 EURO 73.10 71.30

6 Hong Kong Dollar 8.70 8.55

7 Kuwait Dinar 226.10 213.65

8 New Zealand Dollar 45.55 44.20

9 Norwegian Kroner 7.65 7.45

10 Pound Sterling 100.80 98.60

11 Singapore Dollar 47.60 46.60

12 South African Rand 4.55 4.30

13 Saudi Arabian Riyal 18.30 17.30

14 Swedish Kroner 7.90 7.70

15 Swiss Franc 67.70 66.20

16 UAE Dirham 18.70 17.65

17 US Dollar 67.20 66.20

S.No. Foreign Currency

Rate of exchange of 100 units of foreign currency

equivalent to Indian rupees

(For Imported Goods) (For Export Goods)

1 Japanese Yen 55.0 53.80

2 Kenya Shilling 67.05 63.30

SCHEDULE-II


22

Central Excisev Interest - Supplementary Invoices: Due to the

subsequent enhancement of price as per the

sales contract, appellant raised supplementary

invoices and paid differential duty immediately -

Revenue raised demand for interest from the

date of effecting the initial clearance and the

subsequent payment of duty - Issue is no longer

res integra in view of the precedents which held

that 'payment of differential duty by way of

supplementary invoices raised on account of

price revision, would call for confirmation of

interest though such short payment of duty was

completely unintended' and also that 'the price

difference between date of removal and

enhanced price at which goods were ultimately

sold were not exempted from interest chargeable

under Section 11AB of the Central Excise Act

and such interest was payable for the loss of

revenue on any count'. [2015-TIOL-2839-

CESTAT-BANG]

v Refund of duties on account of liquidated

damages: Appellant filed for refund of the excess

duty paid on account of deduction of liquidated

damages (LD) from the invoice price - Appellant

submits that when there is a delay in supply of

goods, LD charges are deducted as

compensation from invoice price and as such

transaction value stands reduced and since duty

is payable only on transaction value, duty paid

in excess is refundable - Revenue contends that

LD are only an adjustment between the parties

and the duty has to be paid on full invoice price -

From the facts and precedents, it is clear that

Central Excise duty has to be charged on

transaction value only and LD had to be factored

in to arrive at the correct transaction value which

has to be treated as assessable value for

payment of Central Excise duty - Hence,

whatever the duty paid in excess on account of

non-factoring of LD would be liable to be refunded

to appellant. [2015-TIOL-2824-CESTAT-BANG]

Income Taxv Deduction u/s 10B: Deduction u/s 10B be

allowed where assessee does not possess

proper approval as a 100% export oriented

undertaking by the Board appointed by the

Central Government but has a letter of approval

received from Software Technology Park of India.

[2015-TIOL-2151-ITAT-AHM]

v Interest on FDRs: The interest earned on FDRs

qualifies for deduction u/s 10B, in case such

FRDs including accrued interest are under lien

with a commercial bank for facilitating the letter

of credit and bank guarantee facilities. [2015-

TIOL-2729-HC-DEL-IT]

Service Taxv Limitation Period: Various correspondences

were exchanged between the appellant and

jurisdictional authorities - Supdt. CE had asked

the assessee on 30.06.2004 to furnish copies of

various documents viz. contract/agreement,

balance sheet, office invoices etc. and in

response to which appellant had given all the

files - nothing happened thereafter and it was

after a gap of four years that SCN was issued by

DGCEI on 31.01.2008 alleging suppression -

appellant could have entertained a bonafide

belief that they are acting as a pure agent while

transmitting the amount of salaries, wages and

allowances - in view of the factual position,

extended period of limitation cannot be invoked

- SCN dated 31/01/2008 demanding ST liability

for period July 2005 to March 2007 is hit by

limitation except for the period which is within

limitation. [2015-TIOL-2835-CESTAT-MUM]


23

v Refund Claim : Appellant's refund claim denied

on the ground that when the service tax amount

was not paid under protest, refund claim filed

after expiry of one year is time barred - Appellant

submits that their payment of service tax for the

subject services has always been under protest

expressly or impliedly; refund of the same

payments has been sanctioned for earlier and

subsequent periods to the demand period and;as

the payment of tax for same service is continuing,

every time and again they need not file their

express protest - From the facts it is seen that

there was a continuing deemed protest by

appellant for service tax paid for the subject

services - When Revenue has already paid

refund for the same services for the two periods

as the service tax was not chargeable, it is not

understood why they had been insistent on

separate written protest for each payment against

the services which were not liable totax - In view

of the precedent, amount of tax wrongly charged

by Revenue is certainly refundable and appellant

is entitled to refund of the tax which was not due

to the exchequer. [2015-TIOL-2832-CESTAT-

BANG]

v Condonation of Delay (COD) : Appeal filed with

a delay of 60 days - Appellant submitted that they

were advised by their auditor that though they

had good grounds for contesting the matter it

may not be practical to contest, however on the

advice of advocate they decided to file the appeal

which was prepared in time, but on account of

various compelling reasons such as non-

availability of the signatory and their legal

counsel, the appeal could not be filed on time

and prayed for COD - Reasons advanced by

appellant attributed to their negligence but by

appreciating that the delay is only of 60 days and

has been caused on account of wrong advice

given by appellant's auditor, delay is condoned

subject to payment of cost of Rs. 10,000. [2015-

TIOL-2831-CESTAT-BANG]

v Car Leasing to employees: The car lease

scheme of providing vehicles to employees would

be regarded as a 'service': Facts: The applicant

was to hire the cars from the car leasing

companies and under the scheme those cars

would be made available to such employees who

are firstly continuing to be the employees of the

applicant and secondly who accept the option to

have the car for their personal as well as official

use and in lieu of this, the company was to charge

the said employees the same amount which the

applicant would be paying to the car leasing

company from whom they hire the car. Findings:

There can be no dispute that the service of

"making available" a car to the employee is being

rendered by the applicant. In this context, both

the conditions are fulfilled which are conditions

in clause (b) of Section 65B (44). Firstly, it is in

the course of the employment because the

agreement between the applicant and employee

clearly suggests that this will be during the course

of his employment only. Second condition is also

satisfied that it is only because the employee is

in service and in that sense the service becomes

in relation to his employment. Ruling: this will not

amount to 'service'. [2015-TIOL-12-ARA-ST]

v Refund in cases where the realization is in

INR: Merely because payment is received in INR

it cannot be said that payment against export

has not been received in Convertible Foreign

exchange, as provided in the Export of Services

Rules, 2005 - Since the INR is received from the

recipient of the services through their foreign

bank i.e. Wachovia Bank N.A. USA receipt of

Indian Rupees shall be treated as 'convertible

foreign exchange' - It also clearly certified in the

FIRC issued by the HDFC Bank that remittance

is in convertible foreign exchange. Payment

received in Indian Rupees for which FIRC issued

by the bank and payment is routed through

foreign bank qualifies the condition of payment

'convertible foreign exchange', therefore on this

ground refund cannot be rejected. [2015-TIOL-

2570-CESTAT-MUM]

v Technology Transfer under Service Tax:

Assessee (DHPL) entered into an agreement with

M/s Denso, Japan in 2002 for transfer of

technology for manufacture of auto components

- Consideration was to be paid by DHPL to Denso,

Japan in form of upfront lumpsum payment and

running royalty based on number of products

manufactured by M/s DHPL using said


24

technology - Whether or not IPR service was

received even after 10.09.2004 by M/s DHPL in

terms of agreement entered into in 2002 -

Agreement for grant of license or transfer/

permission to use technology was effected before

10.09.2004 - The fact that M/s DHPL continued

to manufacture and sell using such transferred

technology even after introduction of ST on IPR

cannot be considered as continuous supply of

service - Rendering of service is effectively

determined by date of transfer/permission to use

technology by M/s Denso, Japan which was prior

to introduction of tax liability on such service -

Only payment of service was spread over a

period of time - Service was performed as soon

as technology was transferred. [2015-TIOL-

2649-CESTAT-DEL]

Cenvat Creditv CENVAT Credit on outdoor catering and

insurance services and Penalty on the same:

Credit denied on 'outdoor catering service' and

'insurance service' availed after 1.4.2011-

Amendment to the Rule 2(1) defining 'input

services' came in to existence w.e.f 1.4.2011

which specifically excluded the two services in

question through the exclusion Clause (C) -

Admittedly demand period is after the

amendment - Though appellant contends that

as per the amendment the services are excluded

only 'when such services are used primarily for

personal use or consumption of any employee',

which means that when company is under a legal

obligation to provide such services and when cost

is borne by company exclusion clause would not

apply; on being questioned as to what would be

the interpretation of the expression 'used

primarily for personal use or consumption of any

employee', appellant failed to give any such

circumstances in which case outdoor catering

service provided by a manufacturer would not

be for personal use or consumption of any

employee - It is admitted fact that prior to the

amendment, the services were covered by the

definition - In fact, the need for exclusion would

arise only when the services are otherwise

covered by the definition - Legislation, in its

wisdom, excluded certain services from availment

of CENVAT credit w.e.f. 1.4.2011, when such

services are otherwise covered by main definition

of input service -To interpret exclusion clause,

in such a manner, so as to hold that such

services have direct or indirect nexus with

assessee's business and thus would be covered

by definition, would amount to defeating

legislative intent - Legislative intent cannot be

defeated by adopting an interpretation which is

clearly against such intent - Hence, no justifiable

reason to allow credit and the denial is upheld -

However, as the credit was taken by reflecting

the same in the statutory books and as such no

malafide or suppression of facts can be attributed

to appellant, penalty is not impossible and is set

aside. [2015-TIOL-2828-CESTAT-BANG]

v Cenvat credit on inputs and capital goods

used for construction of jetty: Jetty is used

within the port for loading and unloading of the

goods from the vessel - Port cannot function

without jetty - CENVAT credit on the inputs and

capital goods used in the construction of jetty is

eligible for output service, namely Port service.

[2015-TIOL-2822-CESTAT-AHM]

v Cenvat Credit of membership of

associations: Credit taken of service tax paid

in respect of membership and periodical of

various business associations and law journals

such as CII, Young President Pune Chapter,

IEEMA, Economic Research India Ltd, MCCIA

etc. - all these memberships and subscriptions

are directly related to the business activity of the

appellant - Cenvat credit is clearly admissible

particularly when the amount paid by the

appellant is booked into their books of account

as expenditure. [2015-TIOL-2632-CESTAT-

MUM]

Customsv Refund of SAD: Claim found admissible but

refund amount transferred to Consumer Welfare

Fund on the ground of unjust enrichment -

appellant has shown the 4% amount of SAD as

receivable under assets as certified by Chartered

Accountant - appellant is not a registered dealer

and has not sold the entire consignment on the


25

bill of entry itself, but the goods have been sold

on the invoices and the invoices indicate the price

at which the goods are being sold - Under the

circumstances, it cannot be said that the 4% SAD

has been passed on to the consumer - appeals

allowed with consequential relief. [2015-TIOL-

2564-CESTAT-MUM]

Local Body Taxv Sodexo Meal Vouchers are not 'goods':

Sodexo Meal Vouchers are not 'goods' within the

meaning of Section 2(25) of the Maharashtra

Municipal Corporation Act and, therefore, not

liable for either Octroi or LBT. It is to be borne in

mind that the vouchers are not 'sold' by the

appellant to its customers, as wrongly perceived

by the High Court, and this fundamental mistake

in understanding the whole scheme of

arrangement has led to wrong conclusion by the

High Court. Without the sanction/ authorisation

of the RBI to operate such a payment system

under the Payment and Settlement Systems Act,

2007, nobody can operate such a system, as

the purpose of the said Act is to regulate the

payment and settlement thereof by means of

'Paper Based Vouchers'. The value of such free

food and non-alcoholic beverage provided by an

employer to an employee is treated as

expenditure incurred by the employer and

amenity in the hands of the employee. [2015-

TIOL-293-SC-MISC]


26

v Trading in China Stock market halted after free fall of shares-Sensex down by 550

Points on massive sell off of shares by FIIs

v Land Custom Station and Immigration Centre to be inaugurated at Srimantapur in

Sipahijala district bordering Bangladesh

v SC Ruling-Central Excise-Pre-delivery inspection charges and after sales service

charges would not be included in the assessable value under Section 4 of the Act for

the purposes of paying excise duty on vehicles-AIT-2015-181-SC

v FinMin all set to announce Minimum Import Price for levy of Customs duty on import of

several Steel Products

v Government considering proposal to merge CBDT and CBEC in Board of Revenue

v CESTAT and ITAT also proposed to be merged

v Bhushan Steel closes its Sahibabad Factory

v Bad News for Stocks-US Fed all set to hike rates for the first time in Decade

v Due date for payment of Central Excise & Service Tax extended to 20th December for

Tamil Nadu-Date of filing of Excise Return extended to 31st January

v CBDT extends due date for payment of TDS/TCS to 20th December for Tamil Nadu

v Government considering imposition of Safeguard duty on import of several Steel

products


27

v New Year begins for CBEC with arrest of Central Excise Officer in Ahmednagar by CBI for demanding

bribe of Rs.4 Lakh

v MD of Team Sustain Limited George Mathew arrested by Service Tax in Kochi for non-payment of service

tax of Rs 1.86 Crore even after recovering the same from clients

v Ex-Chairperson of CBEC Praveen Mahajan appointed as Member of CAT

v CBI spoils New Year Eve Party of Commissioners of Income Tax in Chennai-1988 Batch IRS Officer M

Krishnaswamy raided by CBI

v AK Jain is new Chairman of CBDT

v CBI raids Office & Residence of Rajender Kumar Principal Secretary to Chief Minister of Delhi-Arvind

Kejriwal claims his own Office has been raided by CBI

v Central Excise Department raids Builders demanding excise duty on RMC manufactured on site of

construction on ground that exemption is available only to concrete mix manufactured at site-Infra Sector

represents to FM for issue of Section 11C Notification for grant of exemption on RMC with retrospective

effect

v New CBEC Member KK Sharma gets charge of Member(Taxpayers' Services)

v Chief Commissioner of Chennai Customs S Ramesh to be DG of DRI

v IRS Officer Ashok Mehta appointed as Joint Secretary to President

v 2 Senior Service Tax Officers arrested by CBI in Mumbai for demanding bribe of Rs.1 Crore-Duo trapped

while taking first instalment of Rs.10 Lakh-Duo sent to CBI custody-Cash of Rs.10.5 Lakh recovered from

search of residence of an Officer

v RN Meena Superintendent plus Rahul Chabra Inspector of Central Excise Rajkot suspended for clearing

container containing cement blocks mis-declared as brass electrical parts by EOU Amardeep Exports

v MC Mishra joins as new Member of CBDT

v Anita Kapur appointed as Advisor on Tax Reform

v KK Sharma joins as CBEC Member

v Chennai Airport closed after heavy water logging on Runway


28

NOTES

Documents

Covers January 2016 - bizsolindia.combizsolindia.com/wp-content/uploads/2016/01/Bizsol-update-January-2016.pdfBizsol UPDATE January - 2016 3 scheme, whereas Suraksha Bima Yojana is